Foundations of Financial Management

Canadian 9th Edition Hirt Solutions

Manual
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 Chapter 9

Time Value of Money

Author's Overview
This is one of the most important chapters in the book as far as student comprehension is
concerned. The instructor should first determine how much prior knowledge of time value of
money the students have acquired from accounting or lower mathematics. While most students
are generally familiar with the concepts of future value and present value, they often lack the
ability to identify and categorize the nature of the problem before them.
The material in this chapter will serve as a springboard to the remaining chapters in this section
on valuation, cost of capital and capital budgeting related topics. A good background in time
value of money will ease the transition. The authors suggest a liberal use of homework problems
and a quiz to reinforce the importance of this material.
This chapter has made use of time lines that should be particularly helpful to students in
understanding concepts. These are very good at relating future value to present value, present
value to the present value of annuities, and future value to future value of annuities.

Chapter Objectives
1. Explain the concept of the time value of money. This is the idea that a dollar received
today is worth more than a dollar received in the future.
2. Calculate present values, future values, and annuities based on the number of periods
involved and the going interest rate.
3. Calculate yield based on the time relationships between cash flows.

Annotated Outline and Strategy

I. Money has a time value associated with it.
A. The investor/ lender demands that financial rent be paid on his or her funds.
B. To understand the effective rate on a business loan, the return on an investment,
etc., is dependent on using the time value of money.

Foundations of Fin. Mgt. 9/E Cdn. 9-1 Block, Hirt, Danielsen, Short, Perretta
 Chapter 9

C. Calculator
1. Study the time value keys on a business calculator.
2. Shown on the time line the calculator keys should be similar to those below:

PMT FV

n
PV = Price
%i

PV = single value at the start of a period

FV = single value at the end of a period
PMT = series of equal payments over the period
N = number of interest compounding periods
I/Y = interest rate per compounding period (in %)
CPT = Initiates computation of one of the time value variables
3. The compute key assumes payments (PMT) are at the end of each period (n).
The begin (BGN), or due, key assumes payments (PMT) are at the start of
each period (n).
4. Input known values and solve for the unknown value.
D. The interest rate is also referred to as a discount rate, rate of return, or yield.

II. Future Value: Single Amount

A. In determining future value, we measure the value of an amount that is allowed to
grow at a given interest rate over a period of time.
B. The relationship may be expressed by the following formula:

FV = PV(1 + i )
n

(9-1; page 258)

C. (Optional) The formula may be restated as:
FV = PV  FVIF
The FVIF term is found in appendix A.

Foundations of Fin. Mgt. 9/E Cdn. 9-2 Block, Hirt, Danielsen, Short, Perretta
 Chapter 9

D. Calculator

PMT = 0 FV = ?

n=4
PV = $1,000
%i = 6

Compute FV = $1,262.48
E. To get the interest factor with the calculator input 1 for the present value.
III. Effective or Nominal Interest Rate
A. The effective interest rate includes any compounding effects over the relevant
time period. By formula:
(1 + i) n – 1 = effective interest rate (9-2; page 259)
Where i = interest rate per compounding period
Finance in Action: Starting Salaries 50 Years from Now - Will $284,267 Be Enough?
The rate of inflation will determine the acceptable levels of salary in the future. Although
inflation did increase to double digits in recent history, 3-4% is the historical average. This
box demonstrates a real world example of how money compounds. www.bankofcanada.ca
IV. Present Value: Single Amount (Discounted value)
A. The present value of a future sum is the amount invested today, at a given interest
rate that will equal the future sum at a specified point in time. Also referred to as a
discounted value.
B. The relationship may be expressed in the following formula:

 1 
= FV(1 + i )
−n
PV = FV  n 
(9-3; page 262)
 (1 + i ) 

Perspective 9-2: The instructor may wish to use Figure 9-1 to demonstrate the
relationship between present and future value.

PPT 7of 37 Relationship of present value and future value (Figure 9-1)

Foundations of Fin. Mgt. 9/E Cdn. 9-3 Block, Hirt, Danielsen, Short, Perretta
 Chapter 9

C. (Optional) The formula may be restated as: PV = FV × PVIF

The PVIF term is found in appendix B.
D. Calculator

PMT = 0 FV = $2,524.95

n=4
PV = ?
%i = 6

Compute PV = $2,000.

V. Future Value: Annuity (Cumulative future value)

A. An annuity represents consecutive payments or receipts of equal amount.
B. The annuity value is normally assumed to take place at the end of the period.
C. The future value of an annuity represents the sum of the future value of the
individual flows. Also referred to as a cumulative future value.

PPT 16 of 37 Compounding process for annuity (Figure 9-2)

D. The formula for the future value for an annuity is:

 (1 + i )n − 1
FVA = A  (9-4a; page 263)
 i 
E. (Optional) The formula may be restated as: FVA = A × FVIFA
The FVIFA term is found in appendix C.

Foundations of Fin. Mgt. 9/E Cdn. 9-4 Block, Hirt, Danielsen, Short, Perretta
 Chapter 9

F. Calculator

PMT = $3,000 . . . FV = ?

PV = 0 n = 10
First PMT
%i = 8

Compute FV = $43,459.69
G. Future Value: Annuity in Advance (Annuity due)

 (1 + i )n +1 − (1 + i )
FVA = ABGN   (9-4b; page 264)
 i 
Also: FVA (BGN) = FVA  (1 + i)
Calculator

First PMT
PMT = $3,000 . . . FV = ?

No PMT
PV = 0
n = 10
BGN (DUE) key on
%i = 8

Compute FV = $46,936.46
VI. Present Value: Annuity (Cumulative Present value)
A. The present value of an annuity represents the sum of the present value of the
individual flows. Also referred to as a cumulative present value.
B. The formula for the present value of an annuity is:
 1 
1 −
 (1 + i )n  1 - (1 + i )- n 
PVA = A  = A  (9-5a; page 264)
 i   i 
 
 

Foundations of Fin. Mgt. 9/E Cdn. 9-5 Block, Hirt, Danielsen, Short, Perretta
 Chapter 9

C. (Optional) The formula may be restated as: PVA = A  PVIFA

The PVIFA term is found in appendix D.
D. Calculator

PMT = $6,000 . . FV = 0

PV = ? n=4
First PMT
%i = 6

Compute FV = $20,790.63

E. Present Value: Annuity in Advance (Annuity due)

 1 
 (1 + i ) − (1 + i )n −1   (1 + i ) − (1 + i )− n −1 
PVA = ABGN   = A BGN   (9-5b; page
 i   i 
 
 
265)
Calculator

First PMT
PMT = $6,000 . . FV = 0

PV = ? n=4

BGN (DUE) key on %i = 6

Compute PV = $22,038.07
Also: PVA (BGN) = PVA  (1 + i)

VII. Annuity Equalling a Future Value (Sinking fund value)

A. The process can be reversed to find an annuity value that will grow to equal a
future sum. Also referred to as a sinking fund value.

Foundations of Fin. Mgt. 9/E Cdn. 9-6 Block, Hirt, Danielsen, Short, Perretta
 Chapter 9

B. The formula for the future value of an annuity is:

 i 
A = FVA   (9-6a; page 266)
 (1 + i ) − 1
n

C. The formula may be restated as: FVA = A × FVIFA

FVA
A=
FVIFA
The FVIFA term is found in Appendix C.
D. Calculator

FV = $10,000

? ? ? ?

PV = 0 n=4

%i = 8

Compute PMT = $2,219.21

E. The formula for an annuity (in advance) equalling a future value is as follows:

 i 
ABGN = FVA   (9-6b; page 267)
 (1 + i ) − (1 + i )
n +1

VIII. Annuity Equalling a Present Value (Capital recovery value)

A. The formula for the present value of an annuity, also referred to as a capital
recovery value is:

 
 i   i 
A = PVA   = PVA  −n 
(9-7a; page 267)
1 − 1  1 − (1 − i ) 
 (1 + i )n 
 

Foundations of Fin. Mgt. 9/E Cdn. 9-7 Block, Hirt, Danielsen, Short, Perretta
 Chapter 9

B. The formula may be restated as: PVA = A × PVIFA

PVA
A= The PVIFA term is found in Appendix D.
PVIFA

C. The annuity value equal to a present value is often associated with withdrawal of
funds from an initial deposit or the repayment of a loan.
D. The formula for an annuity in advance equalling a present value is as follows:

 
 i   i 
ABGN = PVA   = PVA  − n −1 
(9-7b; page
 (1 + i ) − 1   (1 + i ) − (1 + i ) 
 n −1 
(1 + i ) 

268)

Perspective 9-3: This can be a good point to demonstrate how annuities work in
everyday situations. The withdrawal example and payoff table are shown in Tables 9-1
and 9-2, respectively.

PPT 25 of 37 Relationship of present value to annuity (Table 9-1)

PPT 26 of 37 Payoff table for loan (amortization table) (Table 9-2)

Perspective 9-4: Ten different formulas have been presented so far. This is a
good point in the discussion to review them. After this has been accomplished, the
instructor can feel more comfortable in presenting additional material.

PPT 28 & 29 of 37 Review of formulas (Page 269)

IX. Determining the Yield on an Investment

A. The formula for the yield on an investment is:
1
 FV  n
i=  −1 (9-8; page 270)
 PV 

Foundations of Fin. Mgt. 9/E Cdn. 9-8 Block, Hirt, Danielsen, Short, Perretta
 Chapter 9

B. (Optional) The unknown value is now assumed to be the yield.

1. Yield: Present value of a single amount (page 270).
a. The rate equating FV to PV must be found.
b. The first step is to determine PVIF.
PV
PVIF =
FV
c. The next step is to find this value in Appendix B to identify the yield.
d. Interpolation may be used to find a more exacting answer.
2. Yield: Present value of an annuity (page 271) (no formula).
a. The rate equating A to PV must be found.
b. The first step is to determine PVIFA.
PVA
PVIFA =
A
c. The next step is to find this value in Appendix D to identify the yield.
d. Interpolation may be used to find a more exacting answer.
C. Calculator

PMT = 0 FV = $1,404.49

PV = -$1,000 n=3

%i = ?

Compute %i = 11.99%

X. Special Considerations in Time Value Analysis

A. Semi-annual, quarterly, monthly, etc compounding.
B. Present value of deferred annuity.
1. Two step solution process

PPT 31 – 33 of 37 Present value of deferred annuity: two step process

Foundations of Fin. Mgt. 9/E Cdn. 9-9 Block, Hirt, Danielsen, Short, Perretta
 Chapter 9

2. Single step solution

PVIFA for total period
– PVIFA for initial period
PVIFA for deferred period × annuity
C. Perpetuities PPT 9-34
A PMT
1. Perpetual annuity PV = = (9-9, page 274)
i i
A
2. Perpetual growing annuity PV = (9-10, page 274)
i−g
3. Perpetual growing annuity (fixed period)
 1   1 + g  
n

PVn = A1   1 −    (9-11, page 275)

 i − g    1 + i  
XI. Canadian Mortgages
A. Monthly payments and semiannual interest compounding require a monthly
effective interest rate by formula: r = nominal annual rate
1
 r 6
i = 1 +  − 1
 2
B. If $95,999 is borrowed over 20 years at 8%.
Calculator

FV = 0

? ? ? ?

n = 240
PV = $95,000
(20 yrs. X 12

%i = .655819692

Compute PMT = $786.94

Finance in Action: Is a Weekly Mortgage a Good Idea?
Calculations examine whether or not a weekly mortgage is an advantage over a monthly
mortgage.

Foundations of Fin. Mgt. 9/E Cdn. 9 - 10 Block, Hirt, Danielsen, Short, Perretta
 Chapter 9

Perspective 9-5: Encourage the students to ‘Review of the Formulas’. The

numerous end of chapter problems help the student to apply the correct formula and
analysis.

Summary Listing of Suggested PowerPoint Slides

PPT 7 Relationship of present value and future value (Figure 9-1)
PPT 16 Compounding process for annuity (Figure 9-2)
PPT 25 Relationship of present value to annuity (Table 9-1)
PPT 26 Payoff table for loan (amortization table) (Table 9-2)
PPT 28 & 29 Review of formulas
PPT 31 – 33 Present value of deferred annuity
PPT 34 Perpetuities

PowerPoint Presentation
The Chapter 9 PowerPoint Presentation, which covers the same essential points as the
annotated outline, consists of 37 frames.

Foundations of Fin. Mgt. 9/E Cdn. 9 - 11 Block, Hirt, Danielsen, Short, Perretta
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And when peace comes I will come for you.”
But Jennie’s face an arch smile wore,
As she said, “There’s a lad in Putnam’s Corps,
Who told me the same, long time ago;
You two would never agree, I know.
I promised my love to be true as steel,”
Said good, sure-hearted Jennie McNeal.

—From “Centennial Rhymes.”

CHRISTMAS AT SEA
By Robert Louis Stevenson

The sheets were frozen hard, and they cut the naked hand;
The decks were like a slide, where a seaman scarce could stand;
The wind was a nor’wester, blowing squally off the sea;
And cliffs and spouting breakers were the only things a-lee.

They heard the surf a-roaring before the break of day;

But ’twas only with the peep of light we saw how ill we lay.
We tumbled every hand on deck instanter, with a shout,
And we gave her the maintops’l, and stood by to go about.

All day we tacked and tacked between the South Head and the
North;
All day we hauled the frozen sheets, and got no further forth;
All day as cold as charity, in bitter pain and dread,
For very life and nature we tacked from head to head.

We gave the South a wider berth, for there the tide-race roared;
But every tack we made we brought the North Head close aboard:
So’s we saw the cliffs and houses, and the breakers running high,
And the coastguard in his garden, with his glass against his eye.

The frost was on the village roofs as white as ocean foam;

The good red fires were burning bright in every ’longshore home;
The windows sparkled clear, and the chimneys volleyed out;
And I vow we sniffed the victuals as the vessel went about.

The bells upon the church were rung with a mighty jovial cheer;
For it’s just that I should tell you how (of all days in the year)
This day of our adversity was blessed Christmas morn,
And the house above the coastguard’s was the house where I was
born.

O well I saw the pleasant room, the pleasant faces there,

My mother’s silver spectacles, my father’s silver hair;
And well I saw the firelight, like a flight of homely elves,
Go dancing round the china-plates that stand upon the shelves.

And well I knew the talk they had, the talk that was of me,
Of the shadow on the household and the son that went to sea;
And O the wicked fool I seemed, in every kind of way,
To be here and hauling frozen ropes on blessed Christmas Day.

They lit the high sea-light, and the dark began to fall.
“All hands to loose topgallant sails,” I heard the captain call.
“By the Lord, she’ll never stand it,” our first mate, Jackson, cried,
... “It’s the one way or the other, Mr. Jackson,” he replied.

She staggered to her bearings, but the sails were new and good,
And the ship smelt up to windward just as though she understood.
As the winter’s day was ending, in the entry of the night,
We cleared the weary headland, and passed below the light.

And they heaved a mighty breath, every soul on board but me,
As they saw her nose again pointing handsome out to sea;
But all that I could think of, in the darkness and the cold,
Was just that I was leaving home and my folks were growing old.

THE REVENGE
By Alfred, Lord Tennyson

At Flores in the Azores Sir Richard Grenville lay,

And a pinnace, like a flutter’d bird, came flying from far away:
“Spanish ships of war at sea! we have sighted fifty-three!”
Then sware Lord Thomas Howard: “’Fore God I am no coward;
But I cannot meet them here, for my ships are out of gear,
And the half my men are sick. I must fly, but follow quick.
We are six ships of the line; can we fight with fifty-three?”

Then spake Sir Richard Grenville: “I know you are no coward;

You fly them for a moment to fight with them again.
But I’ve ninety men and more that are lying sick ashore.
I should count myself the coward if I left them, my Lord Howard,
To these Inquisition dogs and the devildoms of Spain.”

So Lord Howard pass’d away with five ships of war that day,
Till he melted like a cloud in the silent summer heaven;
But Sir Richard bore in hand all his sick men from the land
Very carefully and slow,
Men of Bideford in Devon,
And we laid them on the ballast down below;
For we brought them all aboard,
And they blest him in their pain, that they were not left to Spain,
To the thumb-screw and the stake, for the glory of the Lord.

He had only a hundred seamen to work the ship and to fight,

And he sailed away from Flores ’til the Spaniard came in sight,
With his huge sea-castles heaving upon the weather bow.
“Shall we fight or shall we fly?
Good Sir Richard, tell us now,
For to fight is but to die!
There’ll be little of us left by the time this sun be set.”
And Sir Richard said again: “We be all good Englishmen.
Let us bang these dogs of Seville, the children of the devil,
For I never turn’d my back upon Don or devil yet.”

Sir Richard spoke and he laugh’d and we roar’d a hurrah, and so

The little Revenge ran on sheer into the heart of the foe,
With her hundred fighters on deck, and her ninety sick below;
For half of their fleet to the right and half to the left were seen,
And the little Revenge ran on through the long sea-lane between.

Thousands of their soldiers look’d down from their decks and

laugh’d.
Thousands of their seamen made mock at the mad little craft
Running on and on, till delay’d
By their mountain-like San Philip that, of fifteen hundred tons,
And up-shadowing high above us with her yawning tiers of guns,
Took the breath from our sails, and we stay’d.

And while now the great San Philip hung above us like a cloud,
Whence the thunderbolt will fall
Long and loud,
Four galleons drew away
From the Spanish fleet that day,
And two upon the larboard and two upon the starboard lay,
And the battle-thunder broke from them all.

But anon the great San Philip, she bethought herself and went,
Having that within her womb that had left her ill content;
And the rest they came aboard us, and they fought us hand to hand,
For a dozen times they came with their pikes and musqueteers,
And a dozen times we shook ’em off as a dog that shakes his ears
When he leaps from the water to the land.

And the sun went down, and the stars came out far over the summer
sea,
But never a moment ceased the fight of the one and the fifty-three.
Ship after ship, the whole night long, their high-built galleons came,
Ship after ship, the whole night long, with her battle-thunder and
flame;
Ship after ship, the whole night long, drew back with her dead and
shame.
For some were sunk and many were shatter’d, and so could fight us
no more—
God of battles, was ever a battle like this in the world before?

For he said, “Fight on! fight on!”

Tho’ his vessel was all but a wreck;
And it chanced that, when half of the short summer night was gone,
With a grisly wound to be drest he had left the deck,
But a bullet struck him that was dressing it suddenly dead,
And himself he was wounded again in the side and the head,
And he said, “Fight on! fight on!”

And the night went down, and the sun smiled out far over the
summer sea,
And the Spanish fleet with broken sides lay round us all in a ring;
But they dared not touch us again, for they fear’d that we still could
sting,
So they watch’d what the end would be.
And we had not fought them in vain,
But in perilous plight we were,
Seeing forty of our poor hundred were slain,
And the half of the rest of us maim’d for life
In the crash of the cannonades and the desperate strife;
And the sick men down in the hold were most of them stark and cold,
And the pikes were all broken or bent, and the powder was all of it
spent;
And the masts and the rigging were lying over the side;
But Sir Richard cried in his English pride:
“We have fought such a fight for a day and a night
As may never be fought again!
We have won great glory, my men!
And a day less or more
At sea or ashore,
We die—does it matter when?
Sink me the ship, Master Gunner—sink her, split her in twain!
Fall into the hands of God, not into the hands of Spain!”

And the gunner said, “Ay, ay,” but the seamen made reply:
“We have children, we have wives,
And the Lord hath spared our lives,
We will make the Spaniard promise, if we yield, to let us go;
We shall live to fight again, and to strike another blow.”
And the lion there lay dying, and they yielded to the foe.
And the stately Spanish men to their flagship bore him then,
Where they laid him by the mast, old Sir Richard caught at last,
And they praised him to his face with their courtly foreign grace;
But he rose upon their decks, and he cried:
“I have fought for Queen and Faith like a valiant man and true;
I have only done my duty as a man is bound to do.
With a joyful spirit I, Sir Richard Grenville, die!”
And he fell upon their decks, and he died.

And they stared at the dead that had been so valiant and true,
And had holden the power and glory of Spain so cheap
That he dared her with one little ship and his English few;
Was he devil or man? He was devil for aught they knew,
But they sank his body with honor down into the deep,
And they mann’d the Revenge with a swarthier alien crew,
And away she sailed with her loss and long’d for her own;
When a wind from the lands they had ruin’d awoke from sleep,
And the water began to heave and the weather to moan,
And or ever that evening ended a great gale blew,
And a wave like the wave that is raised by an earthquake grew,
Till it smote on their hulls and their sails and their masts and their
flags,
And the whole sea plunged and fell on the shot-shatter’d navy of
Spain,
And the little Revenge herself went down by the island crags
To be lost evermore in the main.

THE BALLAD OF THE EAST AND WEST

By Rudyard Kipling

Oh, East is East, and West is West, and never the twain shall meet,
Till Earth and Sky stand presently at God’s great Judgment Seat;
But there is neither East nor West, Border, nor Breed, nor Birth,
When two strong men stand face to face, though they come from the
ends of the earth.
Kamal is out with twenty men to raise the Border-side,
And he has lifted the Colonel’s mare that is the Colonel’s pride.
He has lifted her out of the stable door between the dawn and the
day,
And turned the calkins upon her feet, and ridden her far away.
Then up and spoke the Colonel’s son that led a troop of the Guides:
“Is there never a man of all my men can say where Kamal hides?”

Then up and spoke Mahommed Khan, the son of the Ressaldar:

“If ye know the track of the morning mist, ye know where his pickets
are.
At dusk he harries the Abazai—at dawn he is into Bonair;
But he must go by Fort Bukloh to his own place to fare.
So if ye gallop to Fort Bukloh as fast as a bird can fly,
By the favor of God, ye may cut him off ere he win the tongue of
Jagai.
But if he be passed the tongue of Jagai, right swiftly turn ye then—
For the length and breadth of that grisly plain is sown with Kamal’s
men.
There is rock to the left, and rock to the right, and low lean thorn
between,
And ye may hear a breech-bolt snick where never a man is seen.”

The Colonel’s son has taken a horse, and a raw rough dun was he,
With the mouth of a bell, and the heart of hell, and the head of a
gallows-tree.
The Colonel’s son to the Fort has won; they bid him stay to eat—
Who rides at the tail of a Border thief, he sits not long at his meat.
He’s up and away from Fort Bukloh as fast as he can fly,
Till he was aware of his father’s mare, with Kamal upon her back,
And when he could spy the white of her eye, he made the pistol
crack.
He has fired once, he has fired twice, but the whistling ball went
wide.
“Ye shoot like a soldier,” Kamal said. “Show now if ye can ride.”

It’s up and over the tongue of Jagai, as blown dust-devils go—

The dun he fled like a stag of ten, but the mare like a barren doe.
The dun he leaned against the bit, and slugged his head above,
But the red mare played with the snaffle bars like a maiden plays
with her love.
There was rock to the left, and rock to the right, and low lean thorn
between,
And thrice he heard a breech-bolt snick, though never a man was
seen.

They have ridden the low moon out of the sky, their hoofs drum up
the dawn—
The dun he went like a wounded bull, but the mare like a new roused
fawn.
The dun he fell at a water-course—in a woeful heap fell he,
And Kamal has turned the red mare back, and pulled the rider free.

He has knocked the pistol out of his hand—small room was there to
strive—
“’Twas only by favor of mine,” quoth he, “ye rode so long alive:
There was not a rock for twenty mile, there was not a clump of tree,
But covered a man of my own men with his rifle cocked on his knee.
If I had raised my bridle-hand as I have carried it low,
The little jackals that flee so fast were feasting all in a row:
If I had bowed my head on my breast, as I have held it high,
The kite that whistles above us now were gorged till she could not
fly.”

Lightly answered the Colonel’s son: “Do good to bird and beast,
But count who comes for the broken meats before thou makest a
feast.
If there should follow a thousand swords to carry my bones away,
Belike the price of a jackal’s meal were more than a thief could pay.
They will feed their horse on the standing crop, their men on the
garnered grain;
The thatch of the byres will serve their fires when all the cattle are
slain.
But if thou thinkest the price be high, in steer and gear and stack,
Give me my father’s mare again, and I’ll fight my own way back!”
Kamal has gripped him by the hand and set him upon his feet.
“No talk shall be of dogs,” said he, “when wolf and gray wolf meet.
May I eat dirt if thou hast hurt of me in deed or breath;
What dam of lances brought thee forth to jest at the dawn with
Death?”

Lightly answered the Colonel’s son: “I hold by the blood of my clan:

Take up the mare for my father’s gift—by God she has carried a
man!”
The red mare ran to the Colonel’s son, and nuzzled against his
breast.
“We be two strong men,” said Kamal then, “but she loveth the
younger best.
So shall she go with a lifter’s dower, my turquoise-studded rein,
My broidered saddle and saddle-cloth, and silver stirrups twain.”
The Colonel’s son a pistol drew and held it muzzle-end.
“Ye have taken the one from a foe,” said he; “will ye take the mate
from a friend?”
“A gift for a gift,” said Kamal straight; “a limb for the risk of a limb.
Thy father hath sent his son to me—I’ll send my son to him!”
With that he whistled his only son, that dropped from a mountain
crest—
He trod the links like a buck in Spring, and he looked a lance in rest.

“Now here is thy master,” Kamal said, “who leads a troop of the
Guides,
And thou must ride at his left side, as shield on shoulder rides.
Till death or I cut loose the tie at camp, and board and bed,
Thy life is his—thy fate to guard him with thy head.
So thou must eat the White Queen’s meat, and all her foes are thine,
And thou must harry thy father’s hold for the peace at the Borderline;
And thou must make a trooper tough and hack thy way to power—
Belike they will raise thee to Rassaldar when I am hanged in
Peshawur.”
They have looked each other between the eyes, and there they
found no fault;
They have taken the Oath of the Brother-in-Blood on fire and fresh-
cut sod.
On the hilt and the haft of the Khyber knife, and the wond’rous
Names of God.
The Colonel’s son he rides the mare, and Kamal’s boy the dun,
And two have come back to Fort Bukloh where there went forth but
one.
And when they drew to the quarter-guard, full twenty swords flew
clear—
There was not a man but carried his feud with the blood of the
mountaineer.
“Ha’ done! ha’ done!” said the Colonel’s son. “Put up the steel at
your sides!
Last night ye had struck at a Border thief—to-night ’tis a man of the
Guides.”

Oh, East is East, and West is West, and never the twain shall meet,
Till Earth and Sky stand presently at God’s great Judgment Seat;
But there is neither East nor West, Border, nor Breed, nor Birth,
When two strong men stand face to face, though they come from the
ends of the Earth.

THE BRAVEST BATTLE

By Joaquin Miller
The bravest battle that ever was fought;
Shall I tell you where and when?
On the maps of the world you will find it not;
It was fought by the mothers of men.

Nay, not with cannon or battle shot,

With sword or nobler pen;
Nay, not with eloquent word or thought,
From mouths of wonderful men,

But deep in a walled-up woman’s heart—

Of woman that would not yield,
But patiently, silently bore her part—
Lo! there in that battlefield.

No marshaling troop, no bivouac song;

No banner to gleam and wave;
And oh! these battles they last so long—
From babyhood to the grave!

Yet, faithful still as a bridge of stars,

She fights in her walled-up town—
Fights on and on in the endless wars,
Then silent, unseen—goes down.

O ye with banners and battle shot

And soldiers to shout and praise,
I tell you the kingliest victories fought
Are fought in these silent ways.

O spotless woman in a world of shame!

With splendid and silent scorn,
Go back to God as white as you came,
The kingliest warrior born.

—Copyright by Harr Wagner Co., San Francisco, and used by kind

permission.
 ABRAHAM LINCOLN WALKS AT MIDNIGHT
[IN SPRINGFIELD, ILL.]
By Nicholas Vachel Lindsay

It is portentous, and a thing of state

That here at midnight, in our little town
A mourning figure walks, and will not rest,
Near the old courthouse pacing up and down.

Or by his homestead, or in shadowed yards

He lingers where his children used to play,
Or through the market, on the well-worn stones
He stalks until the dawn-stars burn away.

A bronzed, lank man! His suit of ancient black,

A famous high-top hat and plain worn shawl
Make him the quaint great figure that men love,
The prairie lawyer, master of us all.

He can not sleep upon his hillside now,

He is among us—as in times before!
And we who toss and lie awake for long
Breathe deep, and start, to see him pass the door.

His head is bowed. He thinks on men and kings,

Yea, when the sick world cries, how can he sleep?
Too many peasants fight, they know not why,
Too many homesteads in black terror weep.

The sins of all the war-lords burn his heart,

He sees the dreadnoughts scouring every main.
He carries on his shawl-wrapped shoulders now
The bitterness, the folly and the pain.

He can not rest until a spirit-dawn

Shall come—the shining hope of Europe free;
The league of sober folk, the Workers’ Earth,
Bringing long peace to Cornland, Alp and Sea.
It breaks his heart that kings must murder still,
That all his hours of travail here for men
Seem yet in vain. And who will bring white peace
That he may sleep upon his hill again?

CORONATION
By Helen Hunt Jackson

At the king’s gate the subtle noon

Wove filmy yellow nets of sun;
Into the drowsy snare too soon
The guards fell one by one.

Through the king’s gate unquestioned then,

A beggar went, and laughed, “This brings
Me chance, at last, to see if men
Fare better, being kings.”

The king sat bowed beneath his crown,

Propping his face with listless hand;
Watching the hour glass sifting down
Too slow its shining sand.

“Poor man, what wouldst thou have of me?”

The beggar turned, and pitying,
Replied, like one in dream, “Of thee,
Nothing. I want the king.”

Up rose the king, and from his head

Shook off the crown, and threw it by.
“O man, thou must have known,” he said,
“A greater king than I.”

Through all the gates, unquestioned then,

Went king and beggar hand in hand.
Whispered the king, “Shall I know when
Before his throne I stand?”
The beggar laughed. Free winds in haste
Were wiping from the king’s hot brow
The crimson lines the crown had traced.
“This is his presence now.”

At the king’s gate, the crafty noon

Unwove its yellow nets of sun;
Out of their sleep in terror soon
The guards waked one by one.

“Ho here! Ho there! Has no man seen

The king?” The cry ran to and fro;
Beggar and king, they laughed, I ween,
The laugh that free men know.

On the king’s gate the moss grew gray;

The king came not. They called him dead;
And made his eldest son one day
Slave in his father’s stead.

—Copyright by Little, Brown & Co., Boston, Mass., and used by

kind permission.

A PRAYER IN KHAKI
By Robert Garland

O Lord, my God, accept my prayer of thanks

That Thou hast placed me humbly in the ranks
Where I can do my part, all unafraid—
A simple soldier in Thy great crusade.

I pray thee, Lord, let others take command;

Enough for me, a rifle in my hand;
Thy blood-red banner ever leading me
Where I can fight for liberty and Thee.

Give others, God, the glory; mine the right

To stand beside my comrades in the fight,
To die, if need be, in some foreign land—
Absolved and solaced by a soldier’s hand.

O Lord, my God, pray harken to my prayer

And keep me ever humble, keep me where
The fight is thickest, where, ’midst steel and flame
Thy sons give battle, calling on Thy name.

—From the Outlook.

THE YANKEE MAN OF WAR

Anonymous

’Tis of a gallant Yankee ship that flew the stripes and stars,
And the whistling wind from the west-nor’-west blew through the
pitch-pine spars;
With her starboard tacks aboard, my boys, she hung upon the gale;
On an autumn night we raised the light on the old Head of Kinsale.

It was a clear and cloudless night, and the wind blew, steady and
strong,
As gayly over the sparkling deep our good ship bowled along;
With the foaming seas beneath her bow the fiery waves she spread,
And bending low her bosom of snow, she buried her lee cat-head.

There was no talk of short’ning sail by him who walked the poop,
And under the press of her pond’ring jib, the boom bent like a hoop!
And the groaning water-ways told the strain that held her stout main-
tack,
But he only laughed as he glanced aloft at a white and silvery track.

The mid-tide meets in the Channel waves that flow from shore to
shore,
And the mist hung heavy upon the land from Featherstone to
Dunmore,
And that sterling light in Tusker Rock where the old bell tolls each
hour,
And the beacon light that shone so bright was quench’d on
Waterford Tower.

What looms upon our starboard bow? What hangs upon the breeze?
’Tis time our good ship hauled her wind abreast the old Saltees,
For by her ponderous press of sail and by her consorts four
We saw our morning visitor was a British man-of-war.

Up spake our noble Captain then, as a shot ahead of us past—

“Haul snug your flowing courses! lay your topsail to the mast!”
Those Englishmen gave three loud hurrahs from the deck of their
covered ark
And we answered back by a solid broadside from the decks of our
patriot bark.

“Out booms! out booms!” our skipper cried, “out booms and give her
sheet,”
And the swiftest keel that was ever launched shot ahead of the
British fleet,
And amidst a thundering shower of shot, with stun’sails hoisting
away,
Down the North Channel Paul Jones did steer just at the break of
day.

WARREN’S ADDRESS
By John Pierpont

Stand! The ground’s your own, my braves!

Will ye give it up to slaves?
Will ye look for greener graves?
Hope ye mercy still?
What’s the mercy despots feel?
Hear it in that battle peal!
Read it on yon bristling steel!
 Ask it—ye who will.

Fear ye foes who kill for hire?

Will ye to your homes retire?
Look behind you!—they’re afire!
And, before you, see
Who have done it! From the vale
On they come!—and will ye quail?
Leaden rain and iron hail
Let their welcome be!

In the God of battles trust!

Die we may—and die we must;
But, oh, where can dust to dust
Be consign’d so well
As where heaven its dews shall shed
On the martyr’d patriot’s bed,
And the rocks shall raise their head
Of his deeds to tell?

THE FLAG GOES BY

By Henry Holcomb Bennett

Hats off!
Along the street there comes
A blare of bugles, a ruffle of drums,
A flash of color beneath the sky:
Hats off!
The flag is passing by!

Blue and crimson and white it shines,

Over the steel-tipped ordered lines.
Hats off!
The colors before us fly;
But more than the flag is passing by:

Sea fights and land fights, grim and great,

Fought to make and to save the state;
Weary marches and sinking ships;
Cheers of victory on dying lips;

Days of plenty and years of peace;

March of a strong land’s swift increase;
Equal justice, right and law,
Stately honor and reverend awe;

Sign of a nation, great and strong,

To ward her people from foreign wrong;
Pride and glory and honor—all
Live in the colors to stand or fall.

Hats off!
Along the street there comes
A blare of bugles, a ruffle of drums;
And loyal hearts are beating high:
Hats off!
The flag is passing by!

“HE LIFTETH THEM ALL TO HIS LAP”

By Robert McIntyre

Dago and Sheeny and Chink,

Greaser and Nigger and Jap.
The Devil invented these terms, I think,
To hurl at each hopeful chap
Who comes so far o’er the foam
To this land of his heart’s desire,
To rear his brood, to build his home,
And to kindle his hearthstone fire.
While the eyes with joy are blurred,
Lo! we make the strong man shrink
And stab the soul with the hateful word—
Dago and Sheeny and Chink.
Dago and Sheeny and Chink,
These are the vipers that swarm
Up from the edge of Perdition’s brink
To hurt, and dishearten, and harm.
O shame! when their Roman forbears walked
Where the first of the Cæsars trod.
O shame; where their Hebrew fathers talked
With Moses and he with God.
These swarthy sons of Life’s sweet drink
To the thirsty world, which now gives them
Dago and Sheeny and Chink.

Dago and Sheeny and Chink,

Greaser and Nigger and Jap.
From none of them doth Jehovah shrink;
He lifteth them all to His lap;
And the Christ, in His kingly grace,
When their sad, low sob he hears
Puts His tender embrace around our race
As He kisses away its tears,
Saying, “O least of these, I link
Thee to Me for whatever mayhap:”
Dago and Sheeny and Chink,
Greaser and Nigger and Jap.

UNDER THE TAN

By Lewis Worthington Smith

Italians, Magyars, aliens all—

Human under the tan—
Eyes that can smile when their fellows call,
A spike-driver each, but a man.
Rumble and roar! On the tracks they lay,
We ride in our parlor car.
Spades on their shoulders, they give us way,
Lords of the near and the far.
Polack and Slav and dark-browed Greek—
Human under the tan—
Up go their hands, and their faces speak,
Saluting us, man and man.
Cushioned seats and our souls at ease,
Dainty in food and fare,
We are the masters their toil must please,
Or face gaunt-cheeked despair.

Russian and Irishman, Croat and Swede—

Human under the tan—
Giving us homage while making us speed,
As only the generous can.
Riding and riding, hats in our hands,
Something warm in the eye.
Fellows, in spite of your skins and lands,
We greet you, rushing by.

—In the New York Evening Post.

MY LOST YOUTH
By Henry Wadsworth Longfellow

Often I think of the beautiful town

That is seated by the sea;
Often in thought go up and down
The pleasant streets of that dear old town,
And my youth comes back to me.
And a verse of a Lapland song
Is haunting my memory still:
“A boy’s will is the wind’s will,
And the thoughts of youth are long, long thoughts.”

I can see the shadowy lines of its trees,

And catch, in sudden gleams,
The sheen of the far-surrounding seas,